TORONTO, Nov. 8, 2012 /CNW/ - Used car prices continue to move higher across Canada, despite a
stronger-than-expected performance in the new vehicle market in 2012,
according to the Scotiabank Global Auto Report released today. The
improvement reflects a 4% increase in purchases of pre-owned models so
far this year, as well as the dwindling supply of vehicles coming
"Canadian used car prices have consistently gained momentum since
bottoming in early 2009, just before the start of the global economic
recovery," said Carlos Gomes, Scotiabank's Senior Economist and Auto
Industry Specialist. "In contrast, new vehicle prices in Canada have
been flat since 2010, as automakers have enhanced incentives over the
past two years to spur sales."
According to the report, the net result of these diverging trends is
that Canadian used car prices are at record highs relative to the price
of new models. The Scotiabank Used Car Price Index advanced 4% year
over year (y/y) in October, alongside strengthening demand and a sharp
reduction in the number of vehicles coming onto the resale market. The
supply shortfall is the direct result of a plunge in fleet and leasing
volumes since 2008.
"The number of vehicles coming off-lease in Canada will drop to less
than 400,000 units in 2013 - the lowest level in more than a decade,
and roughly 35% below the average of the past five years," said Mr.
Gomes. "The net result is that the appreciation in Canadian used car
prices will likely gain momentum in 2013."
Looking at the new vehicle market, sales in Canada accelerated to an 8%
y/y increase last month, climbing to a record high for the month of
October. Purchases jumped back above an annualized 1.7 million units
for the first time since May. The improvement reflects a further
increase in incentives to clear out the 2012 models, as well as the
introduction of popular new fuel-efficient vehicles. In particular, car
sales advanced 16% y/y last month, while truck purchases were largely
In the United States new passenger vehicle sales remained healthy last
month despite the impact of Hurricane Sandy, which reduced overall
volumes by an annualized 300,000 units. U.S. purchases totalled an
annualized 14.2 million units in October, in line with the year-to-date
average. However, a sales acceleration is likely in coming months as
U.S. consumer confidence is currently at the highest level since
Globally, growth in new car sales stalled in September, with volumes
unchanged from a year ago. The slowdown reflects a sharp fall-off in
sales of Japanese models in China due to a territorial dispute between
Beijing and Tokyo over two uninhabited islands in the East China Sea,
and further deterioration in Western Europe - especially Spain.
Scotiabank Economics provides clients with in-depth research into the
factors shaping the outlook for Canada and the global economy,
including macroeconomic developments, currency and capital market
trends, commodity and industry performance, as well as monetary, fiscal
and public policy issues.
Scotiabank is one of North America's premier financial institutions and
Canada's most international bank. With more than 81,000 employees,
Scotiabank and its affiliates serve some 19 million customers in more
than 55 countries around the world. Scotiabank offers a broad range of
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investment banking. With assets of $670 billion (as at July 31, 2012),
Scotiabank trades on the Toronto (BNS) and New York Exchanges (BNS).
For more information please visit www.scotiabank.com.
For further information:
Carlos Gomes, Scotiabank Economics, (416) 866-4735, firstname.lastname@example.org; or
Devinder Lamsar, Scotiabank Media Communications, (416) 933-1171, email@example.com.